Seeking to unfreeze idle gold, the RBI today made the Gold Deposit Schemes of banks more attractive by lowering the investment time period and allowing mutual funds to participate in the scheme.

"It had now been decided to change the maturity period, of gold deposit schemes, ranging from six months to seven years," the RBI said in a circular.

Earlier the maturity period for the said scheme was between three to seven years.

As per the estimates of an RBI committee, about 20,000 tonnes of idle gold is lying with the people. The central bank wants to channelise the idle gold for productive purposes and also check the demand for imports.

It further said the banks would not be required to obtain prior approval of RBI for introducing the scheme. However, they would be required to inform the details of the scheme, including name of branches operating the scheme, to the central bank.

These changes follow the announcement of the Finance Ministry last month to link the gold Exchange Traded Funds (ETFs) of mutual funds with gold deposit schemes of banks with a view to increase domestic availability of physical gold.

Rising gold imports have been a major concern for the government as it contributes substantially to the widening Current Account Deficit (CAD).

The CAD, which is the difference between the inflow and outflow of foreign currency, had touched a record high of 5.4 per cent of GDP in July-September quarter.